Few companies receive returns after overall revenue declined by 17% in the next fiscal year. However, for Hasbro, the iconic toy and game makers shared their peak (up 14% as of this article) after earnings for the fourth quarter and full year 2024 today.
Hasbro released a more than expected result, with revenue down just 7%, absent from the divestiture of its EONE business, comprehensive operational improvements and a new strategic plan called “Winning Victory.”
The toy book caught up with Hasbro CEO Chris Cocks in this morning’s revenue requirement, demanding a deeper look at some of the company’s wins, challenges and growth areas.
Toy Book: In this morning’s release about winning, you mentioned Hasbro’s evolution into a “modern gaming company” and expanded coverage with more kids and families. What is that?
Chris Cocks: It must have been aging. Birth rates are falling worldwide, and children over 15 are identifying the brands they are focusing on. Overall, the toy industry will have to focus on emerging markets for the next 10 years. In November, I was in Brazil and Chile and while visiting these places, you went to where the shoppers were. These malls serve only 10% of the population, so we ask ourselves, “How do we serve the other 90% of the population and can’t afford a $100 toy?” We also have to meet people they are playing with, including online.
TB: We know that the digital games and wizards on the coast are very successful, but the traditional toy space is still challenging, despite some emphasis on growth among brands like Gi Joe, Play-Doh, Beyblade and Transformers. How will the toys and gaming sectors grow?
CC: First, we know we have to gain more cost-competitive capabilities. I think we’ve got the supply chain out of us. We have been adjusting our suppliers and improving our value proposition. For example, in Hasbro Games, we released a revamped Jenga last year and had a revamped operational and monopoly version later this year. These are cheaper for us, but for consumers, they are much better value. They are better shapes and are easier to put down.
We also focus on the fast market. When I started taking on this role, I discovered the concept that had been on the ground for years and I was shocked that they didn’t make it early. We need to be inventor-friendly – people bring us great concepts – instead of spending 12-14 months, we should immediately take a good idea as a play test. This is a fast time industry.
TB: Even before the global changes we have seen in recent years, Hasbro has begun to diversify in supply chains outside China, and Vietnam is paying a lot of business. In today’s earnings call, you mentioned that the company only accounts for 50% of production in China, with the goal of reducing it to below 40% over the next two years. Where is it going?
CC: Vietnam is an important foundation for us and India is another one we are investing in. The third market we are looking for is Indonesia, and some of our manufacturing partners in Vietnam are building new facilities.
We are also looking for the production of near-developed products for certain products, such as Magic: Collecting transaction cards, Play-Doh, etc., to markets outside Southeast Asia. We are processing numbers in Japan, Türkiye and parts of Europe.
TB: We can’t talk about supply chain and cost awareness without discussing all the tax issues. The guidance you mention about income is a factor in some potential tariffs, but what about consumer pricing? Do you have a baking duty?
CC: This year, we did include 10% tariffs in China into our prices. Since Canada and Mexico are not the main production bases, tariffs on them are relatively non-material. We may encounter some minor instances, including products entering the United States and exporting to Canada. If the government imposes reciprocity or further tariffs on China, we must watch it. Our hope is that as an industry we will avoid the worst and be able to increase competitive prices.
TB: Let’s talk about NERF, it’s an opportunity, it’s an opportunity. Hasbro lost 7.3 points of market share in the Blaster & Accessories category last year. Nerf is still the number one player in the field. Can you tell us about the mentioned “structural category headwinds”?
CC: nerf will fail, but adjust. This is the return to the growth of the blaster on 2026/2027. We must go back to the roots of the world’s first indoor ball – a brand based on safe, active gaming. This means thinking outside of “everything is a dart” and looking for activities we can nerfify and become safe, fun, and approve moms and dads.
When it comes to blasters, I see them as extensions of classic games. We have many different products of age and interest, but we need to be more selective on SKUS. Many of our consumers prefer to buy a $10-30 blaster than the $40-50 option.
TB: Today, you revealed that Saber Interactive (the team behind Warhammer 40,000: Space Marine 2) is making a new AAA video game title based on the Hasbro Tentpole IP. Can you also share your moves about Hasbro developing and self-release of its own AAA games?
CC: From 2018 to today, we have been developing stable studios. Starting from 2018-2022, the video game industry is full of venture capital funds and players’ funds, and pays high premiums for studios. So Hasbro built the studio from scratch. James Ohlen of Prototype Entertainment is produced at Bioware; Ames Kirshen of Atomic Arcade Batman: Arkham series. Because we start with one employee and build from there, you can play for another three years in each game, but once the game starts, the schedule is standard, involving hundreds of people.
TB: What happened to the AAA GI JOE game announced a few years ago? Still continuing?
CC: Oh, yes, this is happening. A great team is working together in Raleigh, North Carolina, Atomic Arcade. This is a very mature thing for GI Joe. You can think of Snake Eye as Batman without a cloak.
Tuberculosis: Partnership is a key part of Hasbro’s future trajectory and is outlined as one of the five building foundations for winning strategies. As we said today, the Barbie X Play-Doh has been revealed and we are on the cusp of another big unveiling, the first of Playmants Toys Mighty Morphin Power Rangers. What can you share when we enter the Toy Fair?
CC: I’m very excited about what Playmants do with Power Rangers. In the past, having crossed the borders with the Electric Rangers and the Teen Mutant Ninja Turtles, we see the power of the franchise mashup. We’re doing it here with Energon Universe and Gi. Joe X Transformers. I’m a peanut butter and chocolate guy and passionate about what they can do.
Overall, what makes me unique as CEO is that when I see other people in our business, I don’t first see them as competitors, and second One is a partner. We flipped.
If we can make money in the process and make money while making money, we are all doing it.
TB: With our summary, given the challenges over the past few years, I do want to ask about the potential for any layoffs at Hasbro this year.
CC: Unfortunately, layoffs are always the choice on the table. Fortunately, we mainly completed the previously announced labor reduction. We haven’t done it yet, because these are all for years. There are some tough times and we have to let those tough people call.
Currently, our step has a spring, and it’s more fun to think about and focus on how to grow and expand our influence. We will do this.
